05-07-2021, 11:32 AM
(05-07-2021, 10:45 AM)ChadR Wrote: There is a BBQ joint in downtown Fort Worth that is cash only. And it is right across the street from the Federal Building in which the IRS Fort Worth branch is located. I would think that this screams audit me. Though their BBQ was pretty good so maybe the IRS is giving them a pass on it.
Chad , I don't know if you will laugh or just think I am an idiot after you read this....
I decided to sell my rental house about a year ago. Paid off and a cash cow for over 5+ yrs but it was needing some expensive repairs. My old back just won't do it and I wanted out of the rental game. Place only worth about $100K but pure profit, no mortgage etc.
A childhood friend of my wife's wants to buy it and he is persistent. He is having trouble finding a place with a big enough for a pole building/Morton BLDG, you know what I mean. His apartment lease is up and I decide to rent the house to him for a few months while we figure things out. At the very least he will let me prep it for sale. I knew him well enough to know he is a good guy, so I rent to him, stop by once a week for a few beers and we chat about stuff. He's moved in now and he wants to buy it bad. The negotiation process was interesting.
Him "How about I just give you a huge down payment and make cash payments to you?"
Me "Sounds great but no, how about we get attorneys, a bank loan and do this completely legal, I'll make the price fair. The place needs work a bank will definitely force me to complete before they would do a mortgage".
Him- "I can't get a bank loan, it's not that I have bad credit, it's that I have no credit, I have never borrowed a dime in my life"
Me- "I know you have a very solid HVAC business for decades, everybody I know raves about their experience with you. You even have employees"
Him, "yeah I pay taxes and stuff, some of it might be under the table, I just don't need to borrow money".
Me- "Ok but we are doing a legal contract, I will need a huge down payment and I am charging you loan shark interest until you have the place over half paid off so I can be comfortable. Five year balloon because I don't want to be a bank when I am old"
He isn't liking the loan shark interest rates a year later, but I got my big down payment and the contract payments are on time. The place is now definitely worth 25% more as the real estate market has changed and he has installed new heating and air, connected to municipal water and dumped the junk well, rebuilt the porch that was a big mess. Invited me to help him pour a big driveway next week and I will show up to help some. Big pole barn never happened yet as he decided he prefers to get the loan shark off his back first.
I'm good with that but I kinda want to avoid the capital gains I have to pay eventually. He could sell the place for a real decent profit in a couple weeks and pay me off but he won't because he still has no real credit. Cash is king lol.